LONDON (Reuters) - Britain's economy came close to stagnating again in February against a backdrop of Brexit nerves and sluggish global growth, and firms in the giant services sector cut staffing at the fastest rate in more than seven years, a survey showed.
The IHS Markit/CIPS UK Services Purchasing Managers' Index suggested the world's fifth-biggest economy would grow by just 0.1 percent in the first three months of 2019 compared with the last three of 2018.
After touching its lowest level in January since immediately after the Brexit referendum in 2016, the services PMI edged up to 51.3 from 50.1. A Reuters poll of economists had pointed to a weaker reading of 49.9 in February.
"Worse may be to come when pre-Brexit preparatory activities move into reverse," Chris Williamson, chief business economist at IHS Markit, said.
"Many Brexit-related headwinds and uncertainties also look set to linger in coming months even in the case of Prime Minister Theresa May's deal going through."
Separate data on Tuesday showed consumers reined in their spending in February and shoppers focused on buying food, including for stockpiling, rather than non-essential items.
Britain's economy defied forecasts of a recession after the 2016 referendum vote to leave the European Union.
But growth slowed sharply in late 2018 as worries mounted about the possibility of an abrupt, no-deal Brexit on March 29, and the global economy also weakened.
Under pressure from within her Conservative Party, Prime Minister Theresa May is still seeking to rework the Brexit deal she agreed with other EU leaders. She has raised the possibility of a delay of the departure date until June.
IHS Markit said optimism about the year ahead among services firms -- ranging from giant banks to high-street hairdressers -- had been lower only at the height of the global financial crisis and immediately after the Brexit referendum.
Many investment decisions were on hold and some firms said European clients were delaying committing to new projects in Britain. New export orders among services firms contracted for the sixth month in a row.
Companies cut jobs at the fastest pace since November 2011, with many opting not to replace people who left voluntarily.
Some firms said Britain's low unemployment rate was making it hard to find skilled staff.
IHS Markit said the main positive in February was the weakest increase in costs for services firms since May last year, opening up scope for offering discounts to clients.